13 December 2007
Go-Ahead announces its pre-close trading update for the six months ending 31 December 2007.
Trading for the Group remains strong, in line with management's expectations for an encouraging improvement in first half operating profit* compared with the first half of last year (H1 2006/7: operating profit* £55.2m).
Our regulated London bus operations continue to perform well. Additional mileage from new and enhanced contracts, consistently high levels of quality incentive revenue and the contribution from last year's acquisitions have all helped maintain profitability in the face of higher costs, including fuel. Fuel hedges are in place for approximately half of this year's regulated and deregulated requirements.
We have recently completed the acquisition ofFirst Group's regulated bus operations in Orpington, consisting of 35 vehicles and around £5m of annual revenue. First year contribution is expected to be largely offset by acquisition and integration costs. We look forward to working with the employees from these operations, which have been integrated into Metrobus' Orpington depot.
Growth in our deregulated bus operations continues, with high single digit percentage increases in revenue as a result of carrying more concessionary and non-concessionary passengers. The performance of our Go West Midlands business remains below our medium term requirements and we are reviewing options for this operation.
Within the rail division, Southern and Southeastern continue to perform strongly and we have made a good start with our London Midland operations, which commenced on 11 November 2007. Passenger revenue to date has increased at a similar level to the 12.7% increase in the first quarter. Growth in passenger numbers continues albeit at a slightly slower rate than last year. Overall, the first half operating profit* from rail is expected to be above the first half of last year, but to be more than offset by a second half reduction, due primarily to lower subsidy receipts and increased franchise costs.
We are making progress in turning around our aviation division, where first half performance is expected to show a reduced operating loss* compared to the £4.2m incurred in the second half of last year. We have implemented the British Airways contract and have won further ground handling contracts, including Qantas at Heathrow. Cargo volumes remain ahead of last year, with strong increases and contract wins at Heathrow and Stansted offsetting decline at Gatwick. We have made some changes to improve our management team, which should bring further benefit in the second half of the year. Our Meteor operations continue to perform well.
We have recently arranged a five year syndicated bank facility for £340m to refinance all of our 364 day bilateral facilities. This facility, together with remaining term debt, will provide the core financing for our target net debt levels (including restricted cash) of between 1.5 and 2.5 times EBITDA. Our share buyback programme continues, and we will implement the usual irrevocable, non-discretionary arrangement to maintain repurchases during the close period which commences on 28 December 2007 and ends on the date of publication of our interim results on the 15 February 2008.
Overall, the Board expects the Group to deliver a good performance for the first half and for the year as a whole.
* before exceptional items and amortisation
For further information, please contact:
The Go-Ahead Group plc
Keith Ludeman, Group Chief Executive 020 8929 8650
Nick Swift, Group Finance Director 0191 232 3123
Weber Shandwick Financial 020 7067 0700
Richard Hews/ Rachel Martin/ Hannah Marwood
Notes to Editors
Bus
The group's bus division operates over 3,600 buses, providing over 540 million passenger journeys and covering around 240 million vehicle kilometers each year. Operations consist of deregulated services in the north east; West Midlands; Oxford; the south east and southern England; and regulated services for Transport for London in the capital.
Metrobus operates London Bus services in South East London as well as commercial operations in Surrey, Kent, East Sussex and West Sussex. The company was established just over 20 years ago in Orpington, Kent and was acquired by the Go-Ahead Group in 1999. The company has expanded to over 400 vehicles and now employs over 1250 people. www.metrobus.co.uk
Rail
The group's rail division, consisting of the Southern, Southeastern and London Midland franchises, operates a fleet of over 770 trains on which over 330 million passenger journeys are undertaken. We operate a mix of suburban commuter and mainline routes around London and the South East,from London to Birmingham and Liverpool, and in the West Midlands. The Southeastern franchise will include the operation of new high speed trains on the domestic Channel Tunnel Rail Link into St Pancras from 2009 while the Southern franchise will include the operation of the Gatwick Express rail services from May 2008. We started the new West Midlands rail franchise on November 11 2007 operating as London Midland.
Aviation Services
The group's aviation services division undertakes a wide range of support services for national and international airlines. Services provided include cargo handling, passenger check-in, baggage handling, information desks, executive lounges, ground handling and customs clearance. In the last year, we provided services to 45 million passengers as well as over half a million aircraft movements. The division includes Meteor Parking which is one of the largest parking companies in the UK, managing around 65,000 parking spaces predominantly at BAA airports, with a range of customers, including BAA, local authorities, retail outlets, NHS trusts, hotels and rail stations. Well known brands include 'Pink Elephant', 'Park 1' and 'eparking'.